Bitcoin Forum

If I visit these websites, each one offers so much valuable information surrounding cryptocurrency world. These platforms include Binance, Luno, Cointelegraph, Coinbase, CEX.IO, crypto.com, and coinmarketcap. The first thing that catches my attention when once the web pages open is the prominently displayed real-time (live) charts depicting the price of Bitcoin in USD. I enjoy looking at the charts because they provide a detailed visual representation of Bitcoin's value fluctuations over time. It allows a bitcoin enthusiast like me to keep track the market movements without stress. however, what consistently boggles my mind is the question of how is the exchange rate of Bitcoin to USD and other currencies determined?

Supply and demand. Each exchange has separate markets for each currency which fluctuates based on the recent trades. You can see the offers to buy and the offers to sell.

Your demand is actually adjusted to the real FX rates of your fiat, but with some degree of lag as well. In addition, price tends to differ a bit between exchanges but they generally tend towards a certain price. That's where the arbitrage opportunities comes in.

Exactly. But on exchanges and other trading platforms. Which is also where other sites take their price from.

Those like Cointelegraph which is a news site is different. Also the price on Coingecko and Coinmarketcap are different. The exchange and coin listing sites take the average price from all the exchanges they listed on their platform.

Most of the volume is in USDT, USDC and other stablecoins because that’s how traders usually work. It’s much riskier to trade against other alts. So the live chart is mostly the most recent USDT transaction. Whether that was a sell or a buy, it’s that price.

Otherwise, if we include all pairs, the algorithm is much more complex. It’s not impossible nor is it necessarily hard to calculate, but I don’t see the point really unless the coin has a very low volume. Big exchanges have huge volume so it’s pointless to make complex calculations. Moreover, it’s a kinda risky business too. If you include all pairs in the calculation process, then you’re about to include pairs with extremely low volume too - which may temporarily significantly influence the calculation at some point.

Anyway, if there’s a high volume BTC-USD pair and a low volume BTC-LTC pair, even then the difference between the USD valuation of both pairs can’t be significant for too long either due to traders quickly finding out about the difference and eliminating it through trades for profit.

The more time you look at price or chart, more stress you will have, not less.

Watching price, looking at chart and reading news are bad combination to make you mores stressful and more emotional in this volatile market. If you don't look at price after like 3 or 6 months, it can be the same.

If you watch and read it daily, your nerves will more stressful fluctuate with price.

As you've already been told earlier from previous comments, the exchange rate of any currency depends on their demand and supply rate in comparison to the value on it and the worth each currency is in respect to USD, when the market surges and the demands increases, there's more possibilities for an increase in the price value and therefore the market rises and the exchange rate increases as well and take effect immediately, marketers uses this informations on this gotten from reliable exchanges and trading platforms to form their average price after series of collections on various market price from different platforms.

The exchange rate of Bitcoin is primarily influenced by the fundamental economic principle of supply and demand. When there is high demand for Bitcoin and limited supply available for sale, the price of Bitcoin tends to rise.

Just as bonds, stocks, gold and the value of other assets are tied to the US dollar, which is the world's most traded digital/physical currency, so is the value of Bitcoin tied to it also, whose value fluctuates due to demand and supply just as "ranochigo" earlier said above. But another thing you need to understand that the value of Bitcoin in fiat is determined by the value of that fiat currency to the US dollar, which is always controlled by the government of that nation with respect to its economic stability or instability.

Example:
We all know the price of Bitcoin have been around $30k for the past 1 months now, right?
2 weeks ago the value of Nigerian naira to dollar was #750 per $1
But today, the value of Naira have fallen, and $1 is now #850
So, 2 weeks ago when $1 was #750, for you to buy 1BTC, you needed to have #750 x $30,000 = #22,500,000

But today, for you to afford 1BTC now, you need #850 x $30,000 = #25,500,000

Note: which means that the value of BTC didn't increase, but the value of my fiat currency dropped, which is another factor that determines value of currencies

Keep in mind, you and most users are talking about centralized exchange, not decentralized exchange or P2P. All centralized exchanges always rely with the average price of every centralized exchanges, this is why the price almost similar with one to another.

While decentralized exchange or P2P, the price is only depend on supply and demand. Right now Bitcoin price is $29,200, but people might be willing to buy Bitcoin for $28,000 or $31,000 depend on the seller.

The BTC/USD price is determined solely on exchanges that have the BTC/USD trading pair. For example, Binance does not have such a pair, so Binance influences the BTC price solely through the USDT and USD arbitrage on Bitfinex.

BTC/USD pair has some exchanges: Coinbase, Bitfinex, Kraken, LMAX, Bitstamp, Gemini... maybe 2 or 3 smaller axchanges and that's all folks.

External market makers or market makers affiliated with the exchange conduct inter-exchange arbitrage. For instance, if Bitcoin becomes slightly cheaper on Bitfinex compared to Coinbase, they buy Bitcoin on Bitfinex and sell it on Coinbase and vice versa.

On point.

Another big factor often enough is also news.
As soon as for example China hinted whatever bans of crypto, the price dropped. Tesla announces to buy btc and/or the possibility to pay for your car in btc, the price went up. It's still supply and demand since because of these news the demand to buy btc in hopes of a raise of price goes up, but still the influence is there.

Crypto is a strange thing still. So hard to see through every detail.

To change price you need place market buy or sell. News can't change price, lol.

Decentralized exchanges and P2P just make arbitrage on centralized exchange + you pay double or even triple fee.

I'm not sure about other currencies but other currencies are pegged to their USD value so basically USD is the only rate we follow for BTC and the other currency just follows the value of USD in their local exchange rate. It's funny how simple we can determine the prices but if we were to investigate further then we will see that it's a whole can of worms, the demand is influenced by other factors too that I am too lazy to mention.

Actually, even P2P, decentralized exchanges do depend on other price indices, like centralized exchanges'. For example, you can check on Bisq[1]. It fetches the latest price data from various providers once per minute. The more the providers, the less it depends on each one as it calculates the average.

Which currencies are "pegged" to their USD value? And what do you mean exactly?

[1] https://bisq.wiki/Bisq_Price_Indices

Philippine peso is one, what I mean by what I was talking about is that the value of PHP in BTC is the same exchange rate as PHP to USD, so like if 1 USD is 55 PHP then the equivalent of 1 USD in BTC is the same as 55 PHP.  Also thanks for the link, not gonna use it though since I don't understand the graphs, hope you can explain it.

Pretty much everything is always valued in USD when speaking internationally. This is because the US Dollar is the world’s reserve currency. As far as how the exchanges calculate the price, they just use the last trade on their exchange. It’s good that each exchange can carry a different price as it allows for arbitrage and price divergence can also foretell potential issues.

How is the price of anything in this world determined? It's the sweet spot where sellers and buyers come together and agree on a value for whatever's being traded. If there's demand for something, and people are willing to pay a certain amount for it, that's how its price gets set. Simple as that!

As for the sites you mentioned, some of them take the current price from a bunch of different markets and exchanges. Then they crunch the numbers, calculating the average value, and finally, they show it to you as the current exchange rate.

And that is why the prices of the demand and supply of each exchange is different. People like Binance for buying and selling of bitcoin and other cryptocurrencies because they have the best price scale in the cryptocurrency world. If vendors in Binance buying $29,126 to 1 BTC = #27,320,030,96 as Nigeria Fiat Currency other exchange like Busa, Ramitano and Paxful price would be lesser than Binance, so the exchanges operate different base on the fluctuating nature of bitcoin.

As you can see the law of supply and demand acts quite differently from one exchange to another.
Let us say a very small exchange, since the trading volume is small and maybe the sell orders are higher than the buy orders,
the seller can lower his price if he wants to execute his order fast. And that price may be different from the selling price in binance or coinbase.
This is why a lot are interested in trading with binance or other top exchanges because they can get a very good deal and quite faster.
So yes, the supply and demand concept greatly contributes to the price movement of the currency on every trading platform.

If I am not wrong then you are asking about how BTC gain value. But in different words. I think it didn't matter whether you use how exchanges finalize prices of BTC and how BTC gains and loses value. Because both have the same meanings. The most fundamental factors are Demand and supply. For example, if the demand is increasing over supply then it means the price will increase. And vice versa.

Other factors are, the impact of the News cycle because if a fud is created in the market among investors or early bidders then they will panic sell which will increase the supply over demand in the market. Which will result in a decrease in the Price of BTC. And those data and matrices are calculated and processed by exchanges. As we know exchanges use trade book data. The more buying means there is more demand and lesser buying means lesser demand thus a decrement in price.

I hope this would answer your query, as once the rates are finalized by Exchange to USD then the rates are then finalized to your local currency according to the rates of USD.

The price is (unfortunately) calculated bu comparing recent trades on a few biggest exchanges. That's how price tickers are made, they often take just a few exchanges and add their trades together into a single average. Why did I say unfortunately? Because tickers don't care about volume on exchanges. This means that if you have 20 million bitcoin and only 1 million being traded while 19 being held out of exchanges, the price of bitcoin will be determined by that 1 million. Low supply on exchanges, like we see now, means high volatility and makes manipulation easy, which is why you shouldn't care too much about short-term price because it's very easy to influence it in contrast to the average stock index like s&p 500.

It's mostly what ranochigo said, but if you want specifics, then it will differ from website to website. Most of them use different widgets, and each widget has different price feeds and APIs that they scrape their prices from.

You got your question answered multiple times  i believe, supply and demand is how the price of bitcoin and other crypto currencies are determined in usd and in real time, i have usd and you have bitcoin, you are interested in my usd and I am interested in your bitcoin, negotiation for how much usd you want for your bitcoin, and also how much usd i am willing to pay you for your bitcoin, if at the end of the negotiation stage, we arrive at a conclusion and the trade is carried out, the final price in usd at which you sold your bitcoin to me is how the price of bitcoin is determined, I believe this is very simple and easy to understand, the analogy I used here does not happen between just two traders, but between millions of buyer and sellers alike, the exchange act as a middle men providing the platform for the buyers and sellers to meet and trade.

In all honesty, there are no extraordinary methods to ascertain the Bitcoin price. The pricing across exchanges is primarily derived from their respective API-based exchange rates. The value of Bitcoin is contingent on the demand from investors and the available supply in circulation. When there is an increased buying pressure, the price tends to surge ("pump"). Conversely, if there is an elevated selling pressure, the price may experience a decline ("dump"). Additional platforms like Coinmarketcap and Coingecko also offer charts sourced from exchanges via API to provide visual representations of price trends.

The price rate of Bitcoin to USD is determined by the personal offers to buy and the offers to sell of each Bitcoin trader on exchange based on the gravity of demand and supply in the market.

I can agree that there are no extraordinary methods to determine bitcoin price, just basic economics principle, the higher the price the lower the demand, the lower the price the higher the demand. Factors that determines this price fluctuations are the real deal. From my observation, news around the world can trigger panic selling or rapid buying. Other factors like differences in prices of exchanges can also determine it's price fluctuations.

I don't agree with that, your panicking after looking at the price depends on your nature and the level of control you have over yourself, generally, when you look at the market every now and then, you can stay informed about what's happening, you might leave the market for about 3 to 6 months if you have invested money in Bitcoin with the intention of not selling for years, but when you have invested to sell back at a higher price, you will need to look back at it.

And to be honest, someone who gets nervous by looking at the price if it's falling should never become a trader in the first place because you can definitely not take decisions that will be right for your finances if you are so emotional and don't have any control over yourself, cryptocurrency market requires patience.

Bitcoin's supply is hard-coded at 21 million coins. Scarcity results. Market attitude, geopolitical developments, regulatory news—all affect demand. These factors can substantially affect Bitcoin demand and price.

There's another factor. Bitcoin's exchange price varies. How come? Each exchange has its own buyers and sellers, causing price differences. CoinMarketCap displays an average of exchange values at that moment. Isn't this digital age amazing?